Thursday, May 22, 2008

Hubble bubble – oil and trouble….

Why the oil price means bubble trouble

All of these factors may have contributed to the upward trend in the oil price over the past six years, which has seen the cost of a barrel of crude rise from around $20 a barrel to $135 a barrel today. None of them really explain, however, why the price should have gone up by more than $5 in the past 24 hours and by a third in little more than a month. That sort of price action is the result of a speculative frenzy of the sort that was witnessed in the dotcom mania of the late 1990s. The oil market, to put it simply, is a massive bubble waiting to be popped.

Posted by rental john @ 04:46 PM (925 views)
Please complete the required fields.



9 thoughts on “Hubble bubble – oil and trouble….

  • Retiredbanker says:

    Bubble; or an increasing awareness that oil is now (or soon will be) a diminishing resource?.

    Strange that the Guardian should publish this article as it is one of the few papers that seems to be aware of peak oil.

    Reply
    Please complete the required fields.



  • mark wadsworth says:

    Good call! I’ll have to set up an account with a futures broker and sell oil. $135 a barrel is just silly.

    Reply
    Please complete the required fields.



  • funny really. who’s to say money’s not the bubble that’s popping in front of our eyes? fractional “reserve” and fiat, western hemisphere central bankers crumbling and taking dud securities on behalf of taxpayers. the main question in my mind now is what will china’s central bankers do. they have 8.5% inflation. to tame it would require interest rates of circa 13% (i’m not an economist or a trader so i could be wrong – but i can’t believe a lower figure would suffice). to have such interest rates would surely end the creeping unpegging with the USD and force a radical gain in china’s money. a stronger renminbi would make it easier for the chinese to import oil (boosting their demand), but make oil more expensive, not less, for the rest of us. ultimately, china is determined to keep growing and even if it’s demand for resources slows, it’s a bigger base now. china’s policies going forward are what we all need to watch.

    Reply
    Please complete the required fields.



  • Yeah, but $125 a barrel was silly too.

    Reply
    Please complete the required fields.



  • Unlike houses or shares, there’s no concept of P/E ratio for oil, and thus no obvious way to calculate the “correct” price. The historic average is meaningless because of Peak Oil. There’s really no way of telling whether the correct value is $13, $130, or $1300. The most gloomy comparison is horsepower – a 100bhp car engine might cost £0.50 a mile to run, whereas 100 real horses would cost hundreds of thousands of pounds to feed.

    Reply
    Please complete the required fields.



  • “U.S. commercial crude oil inventories (excluding those in the Strategic
    Petroleum Reserve) decreased by 5.4 million barrels from the previous week.”

    That’s why. And it’s the beginning of the driving season in the US.

    Reply
    Please complete the required fields.



  • There may be no unequivocal way to say what the price “should” be but one thing is for sure ; if a price goes up as rapidly as the oil price has gone up it’s not supply and demand, it’s the result of speculation, manipulation and bubble behaviour.

    Reply
    Please complete the required fields.



  • Charlie Brooker says:

    Where can I buy oil puts? Seriously, where?

    Reply
    Please complete the required fields.



  • Dave The Dog says:

    $135 a barrel equals about 30 pence for a pint . . . that’s cheaper than a bottle of water or a can of coke. Still a long, long way to go for the oil price rise . . .

    As drewster in post 3 states – what price the alternatives? Especially in powering aircraft and ships!

    Reply
    Please complete the required fields.



Add a comment

  • Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
  • Please note that any viewpoints published here as comments are user´s views and not the views of HousePriceCrash.co.uk.
  • Please adhere to the Guidelines

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes:

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>